Disney Earnings Preview: All Eyes on ESPN and Theme Parks

When the Walt Disney Company reports earnings after the bell Tuesday the big focus will be its media networks division — its largest and most profitable by far.

The big question: How much will lower ratings and higher costs outweigh growth in fees? The company is expected to report earnings of .76 cents per share — down five percent from a year ago — on four percent higher revenue of $11.2 billion.

Disney shares are up 36 percent over the past 12 months, and trading around an all-time high. We'll see whether the media giant and Dow component can keep up its growth.

Within the earnings report investors will pay close attention to various metrics on its cable division. Citi projected a 5 percent increase in cable revenue, with fairly modest ad growth — just 1.8 percent — while they expected growth in fees to slow to seven percent.

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Disneyland

The crown jewel of Disney's media networks is ESPN, and Wall Street will be watching its increased sports costs, and lower ratings.

Deutsche Bank, with a "buy" rating on the stock, estimated that ESPN's sports costs will grow $261 million in fiscal 2013, and that thanks to renewals from DISH, DirecTV and others, ESPN's domestic affiliate revenue will grow $655 million in fiscal 2013.

Wunderlich Securities pointed to the digital potential of ESPN. Wunderlich's Matthew Harrigan wrote that mobile video, higher resolution 4K TV, and even 3D TV, will make ESPN's programming more appealing. In a note, Disney's price target raised from $50 to $58. Harrigan wrote: "We expect ESPN to maintain broad sports leadership, especially with NBC reliant on less popular Olympic sports and the Tour de France."

The other key area this quarter is the parks division. The holiday season is one of the most important for the theme parks, and the company is expected to benefit from a strengthening economy.

Though Disney never provides official guidance, Iger often reveals how bookings are looking so far — analysts will be listening for any insight into the spring break period in particular. And this quarter there are sure to be plenty of questions about progress on the Shanghai Disney resort in the works, as well as the impact of improvements at the domestic parks. (Read More: Iger, Lucas Weigh in on Disney's $4 Billion Lucasfilm Acquisition)

One key factor to keep in mind: The timing shift of the New Year's holiday from the fiscal first quarter to the fiscal second quarter will shift tens of millions of dollars out of the current quarterly report. UBS issued a note revealing that pricing is up across most of Walt Disney World's properties, a good indication that the consumers are responding well to the fact that Disney phased out the deep discounts it relied on a few years ago. (Read More: Advertisers Bet Big on the Super Bowl)